FOMC Minutes Preview: The “Wait-And-See” Meeting

Three weeks after the May 7 FOMC left rates unchanged at 4.25-4.50% for a third consecutive session (as expected) with a unanimous vote, at 2pm ET today we will get the Minutes from said meeting. As a reminder, the statement noted that uncertainty around the economic outlook has increased further and added that ‘‘risks of higher unemployment and higher inflation have risen”. 

The Fed repeated its March language that economic activity continues to expand at a solid pace, though net export swings have affected the data. It maintained its view that inflation remains somewhat elevated and labor market conditions are solid, with the unemployment rate stabilizing at a low level. 

The key changes centered on increased uncertainty and the risks on both sides of the dual mandate. 

In his press conference, Chair Powell reiterated that the Fed is well-positioned to respond as needed and remains in a “wait-and-see” stance. 

On tariffs, he noted they have been larger than anticipated but have yet to show major effects in the data, though concerns remain. 

Powell said the Fed will adjust policy as the economy evolves, balancing dual mandate goals by assessing how far and how fast each side may drift from target. He declined to specify which side is at greater risk and stressed the Fed is in no rush but can act quickly if necessary. 

According to Bloomberg economists, “Jerome Powell signaled a high bar for rate cuts this year. We think these changes likely reflect significant adjustments to the staff forecast following the Trump administration’s changes to tariff policies in the intermeeting period.”

Note, the minutes of the meeting are an account of information that was available to the Fed at the time of the meeting on 7th May 2025, therefore it will not incorporate the recent de-escalation on trade with China.